Scenario 02:
Anticipatory Logistics

In this hypothetical scenario, we explore the complex unpredictability of today’s supply chains that require agile technology to deal with disruptions. Modern supply chains have become data-rich networks characterized by countless variables and dynamic relationships. While the unpredictability of these networks can be daunting, many companies are utilizing advanced predictive analytics to achieve an improved situational understanding that allows them to anticipate material and energy demands. Cognitive computing technology enables companies to not only respond to disruptions with resilience, but to also get a competitive jump within their industry.

Overview

Wharton Electronics was founded by Joshua Wharton, a young protégée of Thomas Edison, in 1895, and has manufactured electric motors for the over 100 years and now produces high-end windshield wiper motors that are used by luxury automobile makers in North America and Europe. Despite its traditional pedigree, Wharton Electronics has continued to thrive in an increasingly competitive global market through early adoption of proven technological advances, particularly as they apply to managing an international supply chain. Most recently, Wharton has added AE’s advanced analytics and dynamic learning capability to its off-the-shelf supply chain management tool.

Anticipating a Disruption

Seventy percent of the world’s zarcon, an essential component of all high-end electronic motors, is mined in the Republic of Lambiwa in Southern Africa. Aware of this fact, due to the efforts of its proactive supply chain management team, Wharton maintains contracts with more expensive producers in the Central Asia. When social media feeds began to show indications of unusual unrest in Lambiwa during the last weekend of July, CSI’s anticipative logistics tool alerted Wharton’s management team. On Monday, August 1st, Wharton purchasing agents negotiated contracts with Central Asian zarcon producers that gave them options to purchase 100 percent of their zarcon requirement at their current price for the next 12 months. The cost increase, if executed including the cost of the option, was over 20% the cost of the Lambiwa zarcon.

Benefits of CSI Technology

A coup occurred in Lambiwa in mid August. Just prior to the coup, as mainstream media attention focused on Lambiwa, many of Wharton’s competitors attempted to move their zarcon sourcing to Central Asia. The earlier movers were successful, albeit at rates nearing 200% of Lambiwa zarcon, but several of Wharton’s competitors were unable to secure contracts in Central Asia. In retrospect, Wharton’s 20% premium looked like a bargain and Wharton’s prescient action, based on AE’s social media alert, gave them more press coverage in one month than they had received in their previous 120 years combined.